AECOM (ACM) Earnings Call Transcript & Summary

Okay. We're going to get started again. Thanks for joining us for now afternoon sessions. So we're very excited to have AECOM with us. Troy Rudd, who is the CEO. He joined AECOM in 2009. Time goes fast. And was the CFO before he was CEO. So I'm going to turn it over to Troy. I think you have a couple of prepared remarks and then we'll go into Q&A.

Okay. Sounds great. Thanks, Andy. And I will say just for everyone's benefit, I looked a lot different when I joined in 2009. So just to start with a reminder of a little bit about what AECOM, what we do. So we are an infrastructure consulting firm, about 52,000 engineers, architects, scientists, program managers, construction managers. So the base of our business is based around deep technical ability. We have about 90% of our business now in 4 countries, the U.S., Canada, Australia and the U.K. And one of the biggest hurdles that we've had in the past has been around our ability to hire people so we can grow. That's been a limits around our growth. But also it's really important to have a highly engaged workforce. And I'm pleased to say that over the last few years, we've been investing significantly in leadership development and technical development. And I feel really comfortable where we are in terms of an engaged workforce. And a couple of really important data points are: #1 is our voluntary turnover, this last quarter and today is about 15% lower than we saw pre-COVID. Secondly is, amongst our, I'm going to say our most influential people in our business, we put people through leadership training, the 5,000 people that participated in the last 12 months, our turnover amongst that group and there are different groups within that 5,000 people, this turnover is between 1.9% and 5.5%. So it means that the people that are most influential in our business, we see voluntary turnover being around 3%. And so that's fantastic for our business because one of the limitations is, when we're a technical adviser, is our ability to add people. So we had an Investor Day in November or in December. And a couple of really important points I felt were -- we wanted to communicate out of that Investor Day. #1 is, we are lucky enough to be participating in really healthy markets. I would say 95% of the markets that we participate in are actually well funded and probably near their peaks in terms of funding and longer-term opportunities. Secondly is, the business has been winning work at an extraordinarily high rate. In the last 9 quarters of all the work that we bid, we win more than 50% of the work that we bid. So of every $2 we bid, we win more than $1 of work. But most importantly, what we define as the largest and most important projects to our clients and to us, our win rate is actually over 70%, which I'll come back to the sort of Q&A why that's important but it's helping us actually transform the business. The other important point to us is we have a really solid technical foundation of people and what they do is they deliver the most complex kind of iconic infrastructure projects in the world. There's only a few people that can compete with us to do that. We have been transforming that business so that we're not focused on the design but we're actually participating much more in our clients' project spend. And we've been building an advisory and a program management business. So in the past, we would participate in about 10% to 15% of the project spend. Given what we've built, we now participate in about 30% of a project spend. And more importantly, when you sort of look at the underlying profit in that project spend, it represents somewhere between 30% and 50% of the profitability that might be inside that project. And so we've been transforming the business by growing our program management advisory business very rapidly. And we've doubled the size of that in the last 3 years and now represents about 15% of our total revenues. The other thing that we've been focused on is actually transforming how we deliver work. And I'll simply leave it at this, is we believe, based on the investments we've made and we're continuing to make, that over the next 3 years we will be able to deliver the same amount of work with 5% to 15% less hours, which will have a tremendous impact, obviously, on the business, our ability to invest but also on our margins. And then last, over the last really, 4 years, we've transformed the business and we're in a place where our mantra is that we will deliver on our targets, deliver what we said we would do today but at the same time, we're investing to deliver more tomorrow. And over the last 4 years, we've very consistently delivered against all of the targets that we set out for ourselves.

Great intro. So I think you answered like half of my questions but let me start. So you've been at AECOM, for a little less than 4 years, you and Lara took over CEO and President. Obviously, a lot has gone right since you took over, you talked about some of the highlights but what are the 1 or 2 accomplishments or changes that you're most proud of? And what are the 1 or 2 targets that had either lagged or you're still working on or you're yet to accomplish?

When we first took over the role, we recognized that there was an amazing opportunity for the people at AECOM. But in order to really -- what we thought was to get the best out of the organization of those people is, we had to take a lot of risk. And the risk that we took was we changed everything. We changed what we were going to perform in terms of our business. So we exited and are still -- we're still finishing that process but we exited a whole bunch of businesses that we didn't think were important, that were important to the future of the business, being in infrastructure consulting business. We changed the entire leadership team. We changed the operating structure. We changed the strategy. And most importantly, we changed the culture of the organization and I think that change in the culture of the organization has been, what's really been important to our success. And so what we're most proud of is that we took that risk and we changed everything. And ultimately, it turned out to be successful but that was a risk in the beginning. When I look forward, I think the things that are most important for us to accomplish is to continue to transform the business so that we have half of our business in advisory and program management. And that becomes really important to our people. The people who work at AECOM are purpose driven. Their view is they really want to deliver a better world and that's the mantra of the company because they really do feel that and they believe that and that's why they join us. And delivering a better world in the past meant that you would deliver better economic outcomes through infrastructure. Well now, it's even more meaningful because they can deliver social outcomes, environmental outcomes, transform the world through infrastructure. And so by us continuing to invest in build advisory and program management, we give them a much greater opportunity to participate in it and the business to participate in it. And then the second thing is, we've got a lot of work to do. It's actually, as I said, transform how we deliver our work.

So I want to go talk about the funding environment for a little bit. Can you characterize, maybe give us the U.S. baseball analogy, what inning you think AECOM is in, in terms of fiscal tailwind in the U.S.? And then you talk about the visibility you have to what I think are relatively high growth forecasts for the company, 8% to 10% for this year, 5% to 8% over the longer term. Do you worry about U.S. elections, what that could mean for AECOM's future? Like how do you think about all that?

So I worry about a lot of stuff every day. It just goes with the job. But I feel very good about the opportunity in North America but I'll start with the U.S. So there's been a lot of funding that's been available for infrastructure. And if I think about a baseball analogy, it would put us kind of in the third or fourth inning in terms of the funding that's available and how it's being deployed. So we have the opportunity to look at through it all with our client, the pipeline of projects that are coming to market. And I think that we see sort of the peak funding being '27 or '28, so 2027 or '28 around the IIJA and the other money that's being brought to market to fund infrastructure. An example of that was the CHIPS Act. The first large award was actually just made today.

Very recently.

Yes. So it takes time for that to come. So when I look at that -- but then when I look around the rest of the world, as I said, we're in 4 really important markets. In Canada, the federal government and the provincial governments in Ontario and Quebec and in British Columbia have announced really large long-term programs to invest in infrastructure. So that's just coming to market and it will come to market over a number of years. And similarly in Australia, the Australian government has a large build program. They just went through revisiting all of their planned investments. And they have completed that and now there's great certainty around what they're going to be investing for the next number of years. And in the U.K., there's a lot of, I think, certainty around water investments and certain social infrastructure investments. It's the one place in the world where I see there's a little bit of a speed bump because I think transportation and large transportation programs that were announced have been canceled. And I don't think we'll have certainty as what's going to happen until after their next federal election, which is in the late fall and it will probably take a year before their new government or the current government figures out what they're going to do in terms of long-term investment. But I think it will come. They canceled high-speed rail 2, which was a $35 billion investment. But they immediately pivoted and said, we're going to invest the same amount of money in infrastructure in the northern states within the U.K. So when I sort of look at the medium term and the longer term, I think that there are fantastic long-term opportunities. And that's why I said I'm really happy about our markets.

Troy, I want to ask you about regions in a second but like just while we're on the U.K., how much of a percentage of the business is it these days approximately?

The U.K. would be less than 10% of the business.

Okay. And do you think it can still grow through this? Or is it kind of going to be more muted? Like what do you think?

So our U.K. business has actually been growing double digits the last 2 years. I think it will be muted. I think it will still continue to grow. And as I said, because of the growth in environment, water and social infrastructure. Transportation, I think, will be slow growth. What we've been able to -- what we will benefit from is, over the last 3 or 4 years, we've been investing to win what I call frameworks. And so framework with the large transportation customers. So as they continue to spend money on their operating budgets or their maintenance capital budgets, we participate in that. And so the business remains stable but I don't think growth in transportation will be significant, till we get through the election.

Got it. And I want to go back to your comments on program management and larger wins in general. Obviously, 50% win rate on just across the portfolio and 80% for large projects. It's pretty good. Like, I think you sort of said program management is 15% of the business now.

It is now, yes.

So how do you keep that up, though? Because it just seems to me like, wouldn't competitors try to adjust to that? And then in your 5% to 8% long-term guide, you talk about 2%, 3% from expanding your markets, 1% to 2% for market share gains. Again, how do you keep that up? It seems hard to sustain that.

I think in the long run it's hard to sustain. But again, the focus of our strategy has been in investing to create a competitive advantage. And if you create a competitive advantage, so something is different, your customers' experience, the win rate is sort of the byproduct to that. It's not something that we're doing or saying we're going to get this win rate. We're going to win no matter what. So when you've got the question, are you winning because of price? And the answer is, no. We're not winning because of price. We're price competitive but in being price competitive, we're still generating the best margins in the industry. At the same time, again, we're investing to create a competitive advantage. And so we're doing that in some very different ways. And will the competitors recognize that and will they start to try to repeat that? The answer is yes. But at the same time, we're continuing to invest to maintain that advantage in that win rate. So I'm going to give you a sort of a simple example of why I think we're winning at a really high rate. One is because, as I said we changed our culture. We've created a culture of globally collaborating. Now in our industry, this may sound weird but a lot of the competition is local. So what does your local team bring to the table against the other people you're competing with to win that project and they bring that local expertise. We've pivoted. What we do is, we figure out what do we need to bring globally and we bring the best globally. And it doesn't mean that they have to fly into town and relocate and live there. It means that they'll participate in the project where they bring this very different experience. And when you talk to the customers about it, they say, I want that because that's not something I'm getting through the conversation through the bid or even through my experience with your competitors. So will other people do that? Yes. But to do that, it takes a little bit of time. It requires leadership change, behaviors as well as culture change and it really requires an operating structure change and it requires investment in the tools and the ability to actually be able to do that, to deliver work globally. So that's one example. It sounds simple but it makes a meaningful difference. Beyond that, we're investing in some other things. So transforming how we actually deliver the underlying work. And we're also focused on -- this is going to sound a little odd but delivering an entirely different customer experience. And so I'll -- I could talk for this for quite a while. So in the interest of giving you one more question, I'll simply say is, our customers in our industry, they typically expect you to deliver something that is technically correct and capable of being delivered on budget and on time. That's great. You know how often that happens? Never, right? There's always some element of change. There's always some element of how confusing it is or how you interact with your customers. Well, imagine if you can change the way using technology and through how your people work, you can deliver something that's an entirely different customer experience. So even as that happens, the customer is understanding and you work with them to adjust and change. So ultimately, they get something that they want. And along the way, they get the outcome in a uniquely different way that gives them confidence, transparency, accountability and trust. And so we're able to do that with technology and we're able to use that, again, through our platform of the people that we bring to projects. And so that's going to be a really important part of the future. We're making some fairly significant investments in how we actually change the customer experience of delivery.

That's helpful, Troy. And then maybe just focusing on the near term for a minute. Your total design backlog growth in your fiscal Q1 that you reported, still a good -- up 9% year-over-year. There was a bit of a deceleration versus Q4. I think you were at 12%. Obviously, 9% is right in line with your growth expectations for the year. But would you say your pipeline momentum is still growing? Is it stable? Is it moderating a bit? What do you think?

Well, our pipeline is growing. So -- we -- I don't see the -- I don't see, first of all, the marketplace opportunity is moderating. They're continuing to grow and we're looking out a number of years. In terms of our win rate, we haven't seen a meaningful difference in the last 9 quarters. So we're still winning at a really high rate. I don't expect that to change. But in terms of the ebb and flows around timing of projects, I would expect our backlog to kind of grow organically 7% to 12%, just bump along quarter-to-quarter and continue to kind of match the trajectory of the market and our win rate.

It's helpful. And like, maybe if I focus on international markets for a second, we really talked about the U.K. but like you're pretty strong in the Middle East, Australia, Hong Kong, like so can those markets still grow in that 7% to 12% range, as you just talked about? Or how do you think about those other ones?

The answer is yes but it's a portfolio. So will it bump around a little bit, as you said, the U.K. and transportation? I don't think it's going to grow at the same rate. But over long term, it probably will. Our Middle East market is still a very healthy market. What we have been seeing in the Middle East is, we've actually seen a rationalization of the number of projects down to a smaller few and the things that really are the priority of the Crown Prince. And so there still is a really healthy pipeline of opportunity in Saudi Arabia and growing across the Middle East. In Hong Kong, there's been a -- I mean it's a really good, stable business but there hasn't been a great pipeline. But in the last 2 quarters, we have actually seen the dialogue and the momentum building around a really good long-term pipeline of large infrastructure projects that we invested in over the next decade around Hong Kong or the Greater Bay. And so that -- I think that there is an opportunity for that market to grow over the next decade.

Very interesting, Troy. And then the other way to split your sales is into public and private, 60% public, roughly. I think you suggested in your last earnings call that you don't see a discernible difference between the growth rates of either but I continue to get the question around your private sector clients, as I think you do too, when rates are higher, people worry about offices, blah, blah. So how do you think about -- maybe tell your confidence level that both sides, public and private could grow at those high single-digit rates?

Yes. My confidence around both of those markets would be equal but it's a little different. So there are certain private sector markets that are interest rate sensitive. So the most obvious everyone talks about is commercial real estate, no question. I would say that the investment in commercial real estate has say, slowed, really slowed. But at the same time, again, we have the benefit of sort of understanding from our customers what will happen over the course of the next 2 or 3 years based on their activity of bringing things to market that we would help them with or bid on. So we saw that starting to happen a few years ago. So our reaction to that was -- is, we said, well, there are opportunities where they will grow, for example, in aviation. So aviation is sometimes private, so it's developer-led, or sometimes it's government-led. We've been able to sort of take the teams of people that do the kinds of work and sort of pivot into aviation away from something that would be looked like commercial real estate investments. So I have confidence around it because I see broadly the opportunity in private and public the same but I do see that within the private sector, that there are things that have slowed down or will stop and there are things that are picking up. And if you look at North America, for example, there is a very strong and large investment that is going to be made in aviation or airports. And whether that's at the large city level, large airport level or whether it's at the local or regional airport level, it is going to be made and it's going to happen for the next decade. I apologize to everybody who is using JFK but I'm sure the airport experience is difficult. And you can blame that on us because we're in the process of rebuilding Terminal 1 and Terminal 6. O'Hare has got a large redevelopment plan. New Orleans has a redevelopment plan. Fort Lauderdale has a redevelopment plan. And so we can see this visibility of this investment being made in airports over longer period of time. So long-winded way of saying I'm comfortable with it, they're both equal but you have to kind of manage those opportunities.

That's helpful, Troy. And then related to that, I should ask you, AECOM's work on PFAS and the DE-FLUORO technology that you've talked about occasionally. Lara did mention the call, growing opportunities with large industrial clients. I think we're cognizant of the fact that a couple of companies I cover are potentially settling with water utilities here in the U.S. So are you seeing any meaningful pickup? Like how would you define PFAS potential growth at AECOM?

Well, PFAS, the work that we do around PFAS in our -- predominantly in our environment water business, I'd say today represents maybe about 1% of our revenue. I would think, over time, based on the visibility that we have to what our clients are going to spend their money on, I would think, over time, it would grow maybe in the 3% to 5% of revenue. So it would be over a period of years. So it's an opportunity but it's not a massive transformative opportunity. And the work that we do is for the customers that after they do work, to first of all, understand if they have a problem. And then they have to build a plan to remediate and they remediate and then they report back that it's been addressed. And so we're seeing that funding grow within our government client base and it's here in the U.S. It is in Australia, it's in Canada but it's slowly picking up momentum. So I just see it as a slight gradual increase over time.

Got it. Any questions from the audience? Anybody? Tim?

Thank you. I just want to circle back to the comment you made about the peak funding being, you think potentially '27 or '28. A, what are you referring to? Is that infrastructure focus? And then b, if that's -- if the funding dollars occur in '27 or '28, when is the actual spending associated with that peak?

So I was -- what I was referring to was, I was referring to funding under the IIJA specifically. So just, Andy's question was around that particular source of funding. And so originally, when the law was enacted, it's long term -- it was long-term funding that was appropriated. And the view was that kind of the peak spending would happen earlier. It took a lot longer to actually start to execute and get the funding in the market, the IIJA funding peaking in -- some time in '27 or '28. The question is there -- what's after that. There are other sources of funding in the U.S., federal funding for infrastructure but the bulk of funding around infrastructure actually comes at the state and local level. . And so I would describe this, it's probably better [indiscernible] as there is just good long-term momentum and need in infrastructure. So will there be ebbs and flows along the way? I think the answer is yes. But we sort of have the view that in the foreseeable future, the funding will continue to increase as supported by our pipeline. Longer term, a little different view. There'll be a bumpy ride. But over the next few decades, we see there being a long-term investment being made in energy transition. And without me belaboring the point, technology has enabled and will enable a bespoke investment in generating -- creating energy capacity. So instead of being lucky that you actually have hydrocarbons in the ground, you'll be able to actually invest in energy but in order to store that energy, to distribute it and to use it, it will require an investment in infrastructure. And all the investment infrastructure, I believe that -- again, we will participate in, in a meaningful way because that infrastructure is large and complex. And again, there are only certain organizations in the world like ours that have the ability to actually deliver that complex infrastructure. And whether it's the design or whether it's the program management of it, we will participate in that in the long run. So when I look across our long-term opportunities, I see the long-term opportunities, as always, there's always been bumps in the road but there's just a massive transformation that's going to happen over the next 30 years in energy infrastructure, in energy generation and as a result of that, almost all of our infrastructure is going to have to be transformed as a result of that.

Any other questions? So Troy, maybe let's go back to margins for a second. When you hosted your Investor Day, you came out -- your new long-term framework was 20 to 30 basis points plus of margin expansion every year. But when you took over, you've averaged 75 basis points plus of margin per year. And this year, the guidance is actually maybe even slightly higher than that with 15.6% margins. So why can't AECOM do better than your long-term guide? I know you want to leave room for investment in rainy days. But is there some sort of upper limit and that's kind of why margin expansion might be less? Like how do you think about that?

So I'll make -- so 2 points. One is, as we are investing in the business, so as our pipeline grows, we have to spend more money on business development because we , again, create the backlog for the future. So we spend more money and that goes through margins. So we're growing margins while actually increasing our investment and delivering better results in the future. We're also investing in transforming the business, as I said, to create long-term competitive advantage. And part of it is also moving ourselves from being a design firm into a consulting firm. So we have half of our work in the future being advisory and program management and half being design. And so we're investing to do that. And those are some fairly substantial investments that we've made over the last 3 years and we're going to continue to make and so they go through margins. So that's -- I'm going to say, we've set out some reasonable expectations about continuing to improve our margins because as we build these things and are successful at them, they allow us to increase margins and we borrow some of that and we invest that in the future of the business. We set a margin target of 17% for the business over the next few years. Do I believe we can go well beyond that? I do. But we don't want to be too ambitious in setting a target that we can't show some visible progress and success at. So we originally set a target of 13%, achieved that, then we set at one of 15% and we've gone through that. We now set 17% and we'll go through that. But ultimately, I would think we would start to look like a consulting business, more less like a design business and consulting businesses typically have operating margins that are 20% or higher. And their return on invested capital is well in excess of 25%. And so as we transform, that's the view that we have in mind but what we've sort of set out as an ambition today is, try and be reasonable that we can attain a goal and then keep stepping beyond it.

It feeds right into my next question, Troy, about like, this wanting to become a digital consulting design firm. You talked at the Investor Day about going to 25% ROIC from 20%. But if you're going to sort of tread on management consultants' turf in the sense like -- it just seems like you will have to invest more, maybe you change your business a little bit more. Like so, sort of how do you get there? How hard or easy is it?

Well, I don't think it's easy. It does require investment but I can say that we've been making the investment, we've proven success. So for example, in program management, we doubled the size of the business in the last 3 years and that will have us over -- build the business over $1 billion. So we've proven that we can make the investment and through our margins to do that. So we'll continue to make those investments and advance that forward. Is it hard -- or sorry, is it -- are we treading on management consultants' toes? Absolutely. Yes, for sure, we are. Do we have something that is different? I think we do. Because if you look at the underlying expertise and I think about this as kind of building a moat around the castle. We have 52,000 professionals that have these deep technical skills, where we have an understanding of engineering, design, technology and we keep building that knowledge. So in terms of energy, we have teams of people that have understand -- a fundamental understanding of the technology that is evolving and will be developed. So we can give advice on what technology will look like around energy generation 20 years from now. Management consultants can't do that. So we're taking advantage of the strength that we have and what we're building on top of that are the skills that a management consultant would bring to the table. So ultimately, what we would bring to the table is something different. Are we stepping on their toes? Absolutely, we are. But are we doing in a way where they can't step on ours? The idea is, yes, we can because if they want to go and create that technical ability, there's 2 ways they can do it. They can come and they can buy it on a per [indiscernible] basis from us but I don't know if we'll be selling it since we're competing. And secondly, as they can go out and build what we've built but that will cost you tens of billions of dollars. I'll just say billions of dollars if you can do it in a smaller fashion but it will take time to do it and you have to integrate it into their culture. And so I haven't seen any management consultant that is actually in a meaningful way willing to do that or step up and do that. So I view us as actually having the path where we have something that creates an advantage and we're going to build on it like we've done with program management and we'll encroach on the management consultant space.

Helpful. So how do you -- just shifting gears, how should investors think about your construction management business overall in fiscal '24 and beyond? Maybe talk about the outlook for that business. I think you're sort of transitioning a little bit to a net service revenue in that business. So maybe talk about that -- in that backlog and did sort of backlog grow? And how do you think about the strategic value of construction management in terms of AECOM running in and owning it versus someone else?

So just, we have program management and we have construction management.

Different things.

Two different things but a little bit similar. So a program manager will actually manage the delivery of outcomes, which means that they will manage contractors. A construction manager will actually manage all of the people that a contractor would manage to deliver that. So they will actually manage procurement. They will actually manage the delivery of design and they will actually manage the delivery of the project but they will do it on a fee basis. And so it effectively provides depth to your program management ability. So from our perspective is, program management, we're always trying to figure out how do we create that differentiation. If we have really deep skills in construction management which complement our program management skills, we bring them together and we offer something that's not available in the market. So we view it as being strategically important and it can differentiate us. In terms of the business that we have, it's a smaller part of our business, our construction management business, maybe represents 6% of our business today. As I said, we're -- one of the things we're doing is, we're pivoting that business. We're having that business participate a bit on aviation projects and actually take that construction management skill and build it into a new market and move that away from the markets that we've been in the past. So it's in a transition period. It's a great technical professional consulting skill that exists and is a world-class consulting scale. And we think it works well with our program management offering that creates some differentiation for us.

And then, Troy, like maybe digging into margin again for a second, like your Americas margin has been best-in-class. It's high but it's been growing maybe a little more slowly than international, which I know you've been sort of working on. So when you think about the 17% plus NSR margin target, like how do the 2 sort of shake out in that target? Like is -- maybe a couple of years ago, you were telling me, I thought, well, you'll get to 12% in international. But now it feels like, well, maybe 13% is the new 12%, like how do I think about where the margins can go?

I think that -- so each of the markets are a little structurally different. And some of it has to do with the scale of your business and some of it has to do with the actual underlying market and how those services are valued. And so our international margins, on average, will never achieve same level of margins that we have in the Americas. It's not to say that in certain places in the world, the margins aren't the same. So for example, in our Australia business, the margins rival the margins in the Americas. It's just in other places of the world, they don't. So it's just the way we've divided the pie up that it shows that there is a visible difference. I think our international margins should do better than 12%. So there's still some room to go. I also believe our U.S. or North American -- our North American margins will continue to improve. We will get -- we will reach a point in time where I think the margin opportunity for expansion will continue -- will be the same in all of our markets and we just sort of view it as a large portfolio. Part of this is the way we just sort of -- the world of design has sort of divided up the world and said this is how you should look at it. But the truth of the matter is, is you should just look at it as the entire portfolio.

So I'm not going to complain about 100% cash conversion, that's 100% plus, excuse me. But you've averaged close to 120%, I think, over the last couple of years. So is there anything different this year? Or is it kind of 100% plus and we'll see how it goes and you can do better?

Year-to-year, there are ebbs and flows. And so this year, we've -- we are investing some more money in the CapEx of the business. Our CapEx budgets are higher. So that will have a little bit of an impact. But over the long run, I would expect us to be 100% plus. And we've sort of been that way in the last 7 years. So I don't see that really changing. We're -- again, as a consulting business, you should have really good cash flow conversion.

And then on cash flow deployment, you have a very prescriptive way of doing things. As you know, you focus on organic growth, share repurchase and dividends. And you bought back a lot of your stock, $1.8 billion since 2020. However, as you think about the next several years and you focus on how to achieve the highest growth with the best returns, it does seem like at least a couple of your peers have chosen a different path than you, focused on strategic acquisitions. So why not augment your growth with strategic bolt-ons?

Yes. Well, first of all, to be fair, some of our peers have also pivoted away from M&A. You can say that maybe the AECOM way is not so bad. So it' not that we don't like M&A, just to be clear. The fact is that we take a very -- we try and take a very disciplined returns approach. And the fact is, is that we see the greatest opportunity, is to invest in organic growth but also to invest to transform the platform of our business, right? So you could take your capital, invest in M&A but what have you really gained that builds long-term competitive advantage. We think it's more important to actually spend the time and the energy and the capital to transform how we deliver, which means that you've got a business that delivers meaningfully better margins. Then at some point in time, you say, well, if I have something that can deliver that same revenue in a much meaningfully different way with higher margins, well, then maybe it is time because now if you're returns focused, maybe M&A makes sense. You can acquire something on someone else's platform but you can deliver it in a lot higher margin and a higher return. So that's -- we've chosen a long run. This is -- it's not because we don't like M&A, it's just that we want to be very disciplined in what we're trying to do. Our job is to invest in organic growth, create a long-term competitive advantage, deploy capital in a very disciplined way and at the moment, it's organic growth and we look at our stock price and we say to us, it looks like it's a good place for us to deploy capital. And over a period of time, maybe it isn't. But we have to -- we'll always be returns focused and our priority is to create a different platform, which then will create opportunities that might look different than how we deploy capital today.

Great. And then last question, like I asked you this question last year, I ask it to every company. What are the top 2 or 3 innovations and structural changes affecting your company over the next 5 years? And are there any emerging industry trends that are perhaps being overlooked in the current discourse?

Well, I think, first of all, the thing that we'll -- thing that we can't overlook is the energy transition. Again, I just think that there is a massive investment that's going to be made. People think about it or talk about it as decarbonization. But instead, think about it as you're investing in technology to generate energy that you can choose to do independently. And ultimately, the cost of that energy will be cheaper than foster fuels -- fossil fuels, right? It makes great economic sense. And at the same time, it is, right, better for the world, the future of the world. So I just -- that's a tremendous trend that we'll participate in. Second thing is innovation. And again, as I -- we're investing to actually transform the way that we deliver work. And as I said simply at the beginning of this is, we're investing to deliver work that will require 10% to 50% less effort or hours. So if it took 100 hours to deliver something, we'll do it for 85 hours. That is transformative, if you can accomplish that. The world that we've lived in has been delivering work the same way for ever. If we can transform that, that creates a long-term competitive advantage and then it creates an opportunity, a platform, which then you can leap forward. So I would say those are the2 most important things.

Great, Troy. We really appreciate you being here.

Andy, thank you very much. Thanks for having me.